5 credit card mistakes you should avoid
Whether you earn thousands of dollars per month or not, credit cards are helpful in many ways. But do always keep in mind, having the power to use a credit card is a privilege. One should use it wisely otherwise, a substantial price should be paid.
Since not all, but a lot of credit card users associates credit card with “free money”, many struggle to keep their credit card balance under control. To help you become a more responsible credit card holder, here are the frequent credit card mistakes you need to avoid:
Paying late. If you think missed payments wouldn’t affect your credit score, think again. There is no excuse for paying late (unless you experience an emergency or unforeseen circumstances) since your due date is stated in your credit card bill. If you think your payment due doesn’t exactly fit the right time, you may contact your credit card company and request a reschedule which aligns to your ability to pay.
Don’t wait to get reported to the credit card bureaus before you pay your bills. Also, not only do late or missed payments bring your credit score down but also cost you hefty fees and increased interest rates.
Minimum payments. Though it is issued in your monthly payment due the amount you have to pay, it is most likely only the monthly interest fee you’ll have to pay plus the small principle amount. It is ideal that whenever you have some extra cash, have the initiative to pay more than the minimum. Save yourself from increasing fees and scan through your credit statement to give you an idea of how much you should really pay monthly.
Unlimited source of cash. Since paying off a purchase is just a swipe away, many think a credit card is an unlimited source of money. Cardholders should always remember that having a credit card does not mean you can live beyond your means. It is okay to treat yourself and splurge in an occasional shopping but don’t overspend and buy things impulsively.
Applying for more credit cards. If you don’t need it, don’t take it. People often think that the way to get out of credit debt is to apply for another one. Even if you get approved for a card, it could terribly hurt your credit score.
Moreover, if it appears you have applied for multiple credits in a short period of time, you would come off as “desperate” and a “high-risk borrower” which will negatively affect your application for other offers and/or loans.
Spending to earn rewards. Again, your credit card isn’t an unlimited pass. Spending to earn reward points isn’t rewarding at all if you spend and use your credit card more often that you normally would if not for the reward points.
Many sees credit card as a good means to build a well-steady credit score. However, others aren’t aware enough that their impulse purchases, poor financial decisions and bad credit card habits greatly reflects their credit scores. Use your credit card responsibly and it should lead you to attaining your financial goals.
Have you experienced any credit card troubles? How did you deal with it? Share us your experience!
About Chie Suarez
Chie Suarez has spent time figuring out ways on saving money and stepping away from her go-to retail stores. She then became a writer for Speedy Money which offers hassle-free payday loans services.